i want to talk to a little bit about the role of cable television, for which you touched on before. in a recent interview with bill o'reilly of a fox, you said making it difficult if not impossible for congress to reach across the aisle and find compromise. you also wrote, not good for the republic. what you mean. >> this goes back. it is a continuation of the same thing. in addition to demonstrating that network news divisions can make money, there was a technological explosion. it wasn't just the three networks anymore. you have cable, satellite television, and the internet. now there are hundreds, even thousands of competitors out there. what is incredibly cheap to put on the air is a couple of people

like you and me just yelling at each other. at talking. what draws an audience is when, in fact, we disagree. when, in fact, we get nasty with one another. what rupert murdoch's demonstrated is that there really was a hunger in america for something that was less liberal than what the networks for putting on the air. so, fox news was born. fox news has been hugely successful. it earns somewhere between $1.10 $0.50 billion a year. -- $1 and $1.5 billion a year. the folks at nbc took a look at what fox has been doing and figure out if they could make

news skewing news to the right, if we could make half of that, let's ask you to the left. and so, you have on cable television news that caters to people who consider themselves progressives, news to people who consider themselves conservatives, you have the afternoon radio talk shows, the evening radio talk shows which cater largely to the conservative. you have the late-night comedy show, john stewart, stephen cole there, that tend to cater more to the left. and the end result is the area that has gone more or less of fellow is serious news organizations reporting the important events of the day without any kind of political bias. we have grown up as a nation believing we are entitled to

hear news that resonates to the news we already -- to the views we already hold. we have seen it this year. a lot of distinguished senators and congress people leaving. snow left the senate because she simply cannot handle the nastiness anymore. there is an awful lot of that and you cannot in a democracy. >> he made the point -- >> the me finish this point. you cannot in a democracy expect people to be able to reach across the aisles and make accommodations for important issues if they are terrified that in so doing, it will expose themselves to the wrath of the right or the left. either john stewart's humor or rosh -- or rush limbaugh's sharp tongue.

>> what you said not to double long ago was that the commercial success of a fox and ms nbc has become a source of nonpartisan -- for you. meaning what? >> i mean, you and i have known for many, many years that we operated in a business. but as you're saying a few minutes ago, that businesses to make all of its money with "i love lucy" and whatever else was hogback in the 1960's an 1970's. they made so much money that they could afford to spend $50 million a year covering the world. that is no longer the case. and that is dangerous.

>> my sense every now and then is that of though there are good journalists in cable television, the whole package of cable television when it is presented to the american people tends to debased about anything it touches. that does not mean that every conversation is bad. but it does mean that the package, to me, comes through as a negative. as something that makes fun of people. that is overly critical. that is not real. >> a program on sunday mornings, first rate television journalism. for me, he is a smart man who invites smart people on to his program and they talk about

important issues in a smart way. i doubt that he has 200,000 people watching that show. it is probably a big audience if he gets that many. it is on a sunday morning which is when programs like that still survive. but you're never going to see that program in prime time. >> in your judgment, since cable television is the place for your going to get right, left, political conversation, and a cnn living in the middle so awkwardly and a trying desperately to keep its base, is it doing good things for our democracy in your view? >> no, of course not. is hu doing good things? >> the idea of cable television. >> no. >> i feel, quite often, if you

eliminated msnbc, fox, and cnn, it would probably improve american democracy overnight. things would miraculously get better. people would talk to one another again rather than engage in an artificial fight which is what most cable television is. >> you take someone like rachel mat out for example. >> very bright. >> rachel maddow is a very smart woman and could easily in the old days, and today, i would love to see her as an anchor on one of the evening programs on network television. but the price of that would be that she would have to keep her opinions to herself. it is her opinions that trot the viewership on msnbc.

now, she is a very bright woman, as i said. but i do not want to know what she thinks about these issues. i really do not. i want to hear her in ford reporting. i want to hear her interview people with that sharp mind of hers. i do not want to know where she comes down on a particular issue. but that is seen as hopelessly old-fashioned. >> i was about to say. ted. >> those days are over. >> i just want to take a minute to remind our radio and television audiences that this is the kalb report. our guest today is ted koppel. you have described the good old days of journalism as an imperfect, untidy little eaton of journalism. you then went on to say that these days, broadcast news has been outflanked and overtaken by

scores of other media options. help us understand the perceived need for these changes because they not only affect the quality of network news, by the way, do you agree with me that it is in the twilight zone a? >> it is in a twilight. but remember, twilight is usually followed by night and then don follows night. i am still hopeful. you know, it is not going to stay this way forever. i think, you know, what tends to happen in this country as you and i have observed over the last 50 or 60 years, we tend to go too far to the right, and then we correct course and passed through the middle and go too far to the left, and then we correct course again i think what is happening to broadcast

journalism requires a course correction. as we come to realize that our educational system is not as good as we like to believe, that our health care system is not as good as we like to believe, that we are spending -- i mean, there are so many things that are on the brink of taking us into real disaster. not the least of them being the possibility of cyber warfare. that is something that television news ought to be covering big time. i am tremendously concerned by the fact that the american public and its military and have never been as far apart as they are right now. we know nothing. we do a terrific job of calling everyone in uniform a hero. we do a terrific job of welcoming them at airports and sang thank you for your service.

we know nothing about what is going on in the military. and what is more, the military and military operations are being launched on the basis of drone of attacks, cia operatives, special operations forces out in the field, and all of that back by a civilian employees, civilian contractors, and we know next to nothing about what is being done by any of these groups. >> because the reporting is not been done? >> welle, it is because we have found the american public will not stand for a draft and the professional military was not enough to fight all over the world. we have been focused on iraq and afghanistan.

we actually believe that all the troops are coming back from afghanistan. i will tell you here and now that is not going to happen. we will still have u.s. troops in afghanistan one year from now two years from now, five years from now. where is the press? obviously, these are not issues that the people who run on these programs today -- >> why not? >> because they do not draw an audience. what draws an audience is charlie sheen. what draws an audience is people yelling at each other. it is not enough to say these issues are important. if we actually -- i know it sounds totally idealistic, but when you and i became journalists as young men, we actually believed that we were

entering, really, a special, chosen profession that meant something to a democracy. >> we called it a calling. >> a calling, exactly. >> exactly. word of honor, i never thought i was going to get rich as a journalist. you do not go into journalism to become wealthy. >> the changes we are talking about, you have already touched upon the affect it has on our society, on the business itself. value systems change. i am not saying we can ever return to the good old days. that is done, but what worries me is whether we can take the value systems of old and try to see them preserved in the digital environment of today.

do you think that is possible? >> i not only thing that is possible. you and i need a third person here telling us what is being accomplished in the digital arena. i think there are people -- we are both having a senior moment. people who look at all the blog sites. >> i did not.

>> there are curators today who because there are so many thousands of web sites make it a point of saying, if you really want to know what is interesting in the area of foreign policy or the environment or cyber warfare, we can leave you in the right direction, and the technology is there so you and i can gather material in a fashion that is infinitely superior to what we used to use. we can harvest information. >> with the reporting, you are getting a ton of information. these curators can provide information, but how reliable is the information? is it based on reporting? >> two key facts have to be made.

there is a brilliant material out there that is being well-reported. >> how do you know that? >> i have been told. on the other hand, the implication of your question is correct. we do not know. when something comes across on the internet we have no way of knowing what the intention, what the goal is, what the bias is of the people who are putting it out there. i will tell you something i learned from one of these talks. it was on the subject of google. the speaker was making the point

that he was a progressive, and he said a friend of his who was very conservative, they took their laptops, and they simply type into the search engine the word egypt, and they got a totally different responses. why? because there is a process going on. every time we search for something on our laptop, we are not only gathering information. we are giving information about what we buy, about what we like, about what our political bias sees maybe -- biases may be, and you and i ought to get the same information if we tie in the same word. that is kind of scary. >> somebody is making up their

mind about what we want. >> it is not somebody. it is a series of 0s and 1s. it is a computer algorithm. >> the algorithm is fine, and i understand it exists, and i will salute it. is there, but i want to know what that has to do with journalism. who gets up in the morning and covers some say -- something? who is going to cover a war? who is going to cover a campaign? without the journalists doing on is information gathering, all this stuff is below it.

>> there are plenty of people who are going to do gathering, but the key word -- >> that is not true. there are fewer reporters covering the war in afghanistan then there has ever been. >> fewer american reporters. >> american and others as well. >> i frequently will watch the bbc or of jazeera, because particularly when things are going on in the middle east i am going to learn more from people in the area. >> do we know they are reporters? we know they speak arabic. >> we know they are reporters. do we know they are objective is? that is a different question. thus we do not. >> we have almost given up in our own country. it is still possible to pick of

the new york times, to listen to npr, to watch the news hour. the outlook is there. my old friend says, is dull. sometimes i say, you are a little too daring. but is there. there is still good journalism being committed. the good journalists cannot help it if the public seems to be moving in other directions. i am making the point, and i do not know if i am wishing for this to happen, but i think it will only happen when people realize how devastating the consequences are of not having

objective journalism. >> do you know clark kent? >> know him well. we have on occasion use the same phone booth. >> clark kent is no longer the reporter for the daily planet. >> what does he do now? >> he is a blogger. >> where does he change? >> probably in the curator's kitchen. that is an indication of how profoundly different journalism is from years ago to today. i am saying this is so much more difficult to find, and the areas you will go after are not terribly reliable, and i would like to think about the north star of journalism today.

when you started, you had somebody who did extraordinary things at the network, including starting nightline. for me it was a lot of other people. who are they in today's world? >> the fact is he had been the president of abc sports, and we were terrified of this guy who came in wearing his jungle suit and his bracelets he wore. he was not one of the champions of great journalism when he came on.

he became that. he evolved, and he is involved because he ran up against in movable objects like helen k. smith and frank reynolds, and people who still believe good journalism was important, and nobody -- >> he recognized good journalism and moved toward it. >> he recognized it. i will tell you the back story of my life. for about a year before the iran hostage crisis common they came to us and said, anytime something of major importance happens, run a story on it, 10 minutes, 15 minutes. he initially wanted a one-hour news cast at the dinner hour. the affiliated stations would

not go along, so he decided he was going to seize that time, and by the time we got to the iran hostage crisis, we were running out of things to say. he said to us, i do not care. tell me the difference between a sunni and a shiite. tell me about assad and how he came to power. he kept that program going, because he recognized there was a tremendous american appetite for this story. had it not been for that appetite common and it wouldn't not have been born. >> you did not have the tonight show or the letterman show. >> i will tell you something

that has changed enormously. when nightline began in march of 1980, you did not have the letterman show yet on cbs. they would be run some old and trauma, but among the three programs, but tonight show, the cop drama, and nightline we had 70% of homes watching television at 11:00 at night. these days they are lucky to have 25%. that is what happened because what you did not have 35 years ago was cable, satellite the internet, and all of those things have diluted the importance and the reach of the network.

>> maybe twilight is too soft. >> you still have evening newscasts. among the three of them, i suspect we have between 15 million and 20 million viewers. it was 50 million. cronkite alone probably have about 20 million people. >> that certainly is true. the responsibilities of journalism to democracy and to our society. i want you to talk about about a little bit more. i want you to explain why there is this connection between the flow of news and a vibrant society.

>> if the american voting public is ignorant of the issue, is uninformed, how can it make intelligent decisions? it is bad enough the citizens united decision of the supreme court has resulted in -- the new york times said the amount of money spent on all the election campaigns, $6 billion. i was shocked by that. i moderated a discussion.

it was fascinating, but mr. rove made the. we spend infinitely more than that on dog food. >> it is absurd. >> is. as much as i love op eds, if they end up being produced, people keep saying things were much worse in jefferson's farm. yes, they were, but you only had broadsheets being distributed. you did not have everyone walking around with a communications device. information is spread so quickly that if we do not have reliable, trustworthy, objective sources

of information, our whole electoral structure is going to collapse under its weight. >> cnn's story about how the nyse-listed under 3 feet of water -- cnnn's story about how the new york stock exchange was under 3 feet of water, it was not true. they got a lie. i do not want to pick on cnn, but that is one of the dangers of trying to retain the best standards, some practice, some

place where you can turn and say this is the right way of doing things, and this is simply wrong. despite all the good things you have said, all of that stuff being said, i am left with an uneasy feeling. i do not know where the information is coming from. remember years ago when we knew every cameraman who is taking pictures of some of zandt in cairo. -- some event in cairo. you knew it was and of effective look. -- an objective look. i do not know who is taking the pictures.

they may be working for some small network because the network does not want to bring in its own cameraman. >> notice if you watch more than one newscast, notice the number of times you will see precisely the same video when it comes from overseas in large part because the networks do not have their own reporters, and they have brought it from the same source. . no. 2, what is wrong with having a local reporter covering the event? a local reporter speaks the language and knows the people. let's say the local reporter is reported from tehran and the local reporter knows if he or she makes a misstep, they are going to be arrested and thrown in jail. the american reporter may get

thrown out of the country, but that is probably the worst that is going to happen. i find there is no willingness to believe objectivity in journalism is possible. i keep hearing there is no such thing as absolute objectivity, to which i say, when you go to hire a lawyer, and you ask, do you like me? if you do not like me, you are not going to be able to put your heart into this thing. when you go to a doctor, you are not asking what his or her politics are. you want that doctor to deal with you on her best professional expertise, and what

do our critics want to believe? i argue there really was a time when men and women could be a professional journalist capable of objectivity. that does not mean they do not go home and rail against the darkness. that does not mean they do not have the favorites in an election. to this day, you have known my wife for many years. she does not know how i vote in an election. i do not tell her. i do not think it is appropriate. >> and you are still married? >> let me put it this way. she knows everything else about me. i think she can figure it out. i never told her. >> that is so interesting.

what does that say? >> i have believed since i was a young and reporter that my personal opinions have no place. >> when i talk to someone who was my student, bill believes profoundly you are a biased guy. i would say, you have not a clue as to how i vote. he said, everybody votes. that attitude has been effective

as a kind of truth by so many people. >> absolutely. until we are prepared to except the principle of objectivity or at least a general effort toward objectivity is possible, patrick mcgann -- monahan said everyone is entitled to their own opinion. these days we believe everyone is entitled to his own facts. you want right wing facts, we have got it. you want left wing facts, we have got it. >> how have you made it clear for people there was a basic impulse on behalf of the

reporters to tell it straight, but cable is where you are getting the opinion. cable is where you are getting the opinion on the networks. they say, you are as biased as everyone else. did you will not admit it. >> i think the problem is they are not putting the money into the kind of news coverage that is vital to a democracy. the money would help. when has the world ever been a more dangerous place than it is now? i happen to believe at the worst times of the cold war, the fact

of the matter is there was a balance between the great powers. these days we need information from the third world more than before. we do not have the reporters. >> that is true. i am sorry to say at this time we have to run out of time. they have got to pay respects for people like us. i want to thank our audience who has been so polite tonight. they have been able to see us through the magic of the internet. they can actually see us, not just on cable, but they can see us through the internet all over the world. it is a magnificent thing, and i want to thank our guest.

let me close with the following thought. we are all dazzled by the digital age and understandably so. given the speed and access of everything live is truly amazing, but every now and then i worry we may be losing sight of the fact that this new technology is only a tool. it is a tool for the dissemination of what we have discovered. it can never be considered more important than the content of what we have discovered. hourly daily broadcasts, the story that need selling, a crime or of this judgment that needs exploring.

i asked our their indian and new edward r. murrow -- are there any new edward r. murrows? we need that. journalism is essential to democracy. he once said, this is no time for fear, and he was right. rise up. ted and i have done the best weekend. now it is your turn. use these modern tools, but use them well. now once again, good night, and good luck.

you have been warned. this is your time to ask questions. there are two microphones. i see one over there. if you get up to ask questions, that is fine, and the idea is to ask a question. do not make a speech, because i will cut you off. i will be very nasty. why don't we start off on the right? >> how are you doing? can you assess the coverage of the israeli-palestinian conflict? is it clear who is doing the best job? >> there has been a war going on

in gaza for well over 10 years now. it has cost more than $5 million. 5 billion people alive died of starvation, disease, have been driven into the jungle, more than 5 million people. we have barely even noticed it. i mention that because journalism is frequently affected by national interest. to the degree the perception of what happened in the congo is less important than what happens in the united states, we do not cover it. we are engaged by what happens syria, but i do not know if shed

a great deal of light. i know you began by asking what is happening in gaza and what i think about that. >> yes. >> any time israel is involved in a story, did becomes excruciatingly -- id becomes excruciatingly difficult to cover, because there is a sense of identity in this country with israelis, and many reporters, old friends and colleagues of

mine used to be criticized for taking an anti-israeli point of view. he spent many years living in the arab world and had a sympathetic. of view to arabs. i think what is happening in gaza right now meets in the definition of tragedy. the israelis cannot be expected to stand by while their cities are rocketed. on the other hand, the idea that the israeli defense forces are equally professional, the number of casualties on the palestinian side are going to be much greater.

they are leaving an impression there is something unfair. this is the time you need correspondents who have spent years in the region, because by and large, you ask what i think of the coverage. i think it is surface. it focuses on the casualties. you do not know what the possibilities may be for agreement on the sides. i think that is one thing we have lost in not having correspondence to report from the region year after year. >> it is interesting that a couple nights ago, and abc world news tonight had a tour during

another story while the gaza story erupted, and she had a big intro. they gave her about 45 seconds to do the story, and you could see she could not get it out. it was difficult, so that is yet another dimension of trying to make everything right size, even and alan -- an analysis from a reporter who really does understand that story. it would have been wonderful to hear more from her. >> yes, please. >> you mentioned an interesting point before he cut you off about our intelligence services.

>> he does that all the time. >> it was the moment you were talking about how our intelligence services are may be stretched too thin. you were intimating we were not only having a lack of journalists of we were stretched. i thought it was interesting because the americans trust the pedagoguery. >> essentially the same thing is happening within the intelligence community, and that is the perception that

technology is an adequate replacement for human intelligence. there is a perception you can get anyone from anywhere. you can reach any part of the world in 18 hours or less, and by virtue of the satellite, you can report instantaneously, but that is a substitute for having our reporter on the ground for years. the same thing has happened for ages. the intelligence community has suffered budget cuts, and people say you can get the same kind of information with intelligence and reconnaissance when having a unit on the ground gives you a third dimension you cannot get by technology.

>> yes please? >> i am a retired former service officer. i ended my career shortly after afghanistan at the state department with a press officer who has never worked with the press. i am wondering if those of you in the networks ever noticed it went away, and do you think that is part of the weakening of the ability to report stories with great object committee oversees? >> we became friends after i came back three years in indochina and was assigned as a correspondent.

i have been blessed throughout my television career with having competitors. as you may imagine, you do not travel with people from your own network. did you travel with the opposition. i was impressed with these men's performance. during the time we travel together, henry kissinger and i in the middle east, we always have somebody on the plane, and i remember a woman who was a reporter, and she did not talk much. she was a very good

reporter. i rather suspect you do not have anyone traveling with the secretary anymore, and that is a plus. >> i want to share something. being a competitor, when we travel in the middle east, i had a bad condition, and we would arrive with our overnight bag. abc news picked up very often my typewriter, my overnight bag because he could see i could not take it up. that is a competitor.

>> i was hoping you could talk about the activity. i use the example of global warming. how would you cover that story in that time when most of the community appears to be pretty solid on one side. who do decide is the most credible people in that discussion? >> i was for almost 26 years the a anchor of the managing editor of nightline, and i was deaf to reporters who would give one opinion for, one of opinion against.

it is the laziest form of journalism in the world to the degree one side or another can be ascertained as having the facts on its side, you have an obligation to report back. i do not think there is an obligation to say, on the one hand, newtonians believe and apple will fall from the tree and hit the ground and there is a law simply because an idiot and claims the other was. objectivity it does not mean taking one of this side and one of that side. your job as a journalist is to do the reporting, and to analyze it, to put it into proper

context, and if the overwhelming scientific community, or the scientific community overwhelmingly says there is global warming, the use -- do you go in the direction of some other intelligent voice? why not? you do not do it now with equal time. >> when that was first directed at the networks to be objective and fair, what they would do, as you remember, they would put a republican up here for 30 seconds and a democrat for 30 seconds, and they felt they were telling the story, but they never got at the essence of objectivity as you have so well described its tonight.

>> my name is catherine rodriguez, and i am a junior journalism major at gw. my question is in this volatile climate, we have noted several instances where major news networks rushed for information that happen to be wrong. how do we balance accuracy with the desire to be the first to break the news? >> that is a good question. >> i have been lecturing about this desperate approach, which i think is often the driving engine, particularly of 24-7 cable news.

somehow when a major story broke, i still remember moments of huge self congratulations. if we could say, we have the story one minute 38 seconds before, and i remember saying at the time, i do not know of anybody out there who is sitting there as we were sitting there with 10 television monitors aware of the fact cbs had something first, and we were third. if you are watching television, are you switching madly between the channel 7? what was bad 25 years ago is horrendous today.

what if i am watching cnn, and i am not constantly flipping back? i have teenage grandsons who seem incapable of watching something for more than eight seconds at a time without switching to another channel. did i answer your question? >> not really. there is one more year. this will be the last one, because we are out of time. i want to apologize to everyone waiting to ask a question. when this is over, why don't you deceived mr. koppel -- besiege mr. koppel? >> i have an on-line news site

that is usually considered to be dull and boring, and we have these not just to disseminate but to get the information out, and throughout the evening it seems we have been given this choice of charlie sheen reporting and important news presented in a way that is the goal, and we have so many tools at our disposal, why do we need to think of important news us something that cannot be cool and engaging and fun and even profitable? why does it have to be presented as something dull?

>> you may be surprised to learn i do not entirely disagree with you. for many years i used to tell the staff there is no story out there we cannot do it in an engaging, interesting way. i think you have made a mistake of interpreting what we have been saying when we refer to important that important means dull. on the contrary, i think those are the things that are most important, and it is our obligation not merely to say, here are the facts, do with them

as you will, and we have to make the movie it interesting. if interesting means controversial, it's interesting means argumentative, it's interesting means sacrificing objectivity, i guess -- if interesting means sacrificing objectivity, i guess you are right. >> i do not think you will ever be seen as dull. thank you. >> thank you. you are as wonderful as ever. >> c.e.o. of the nasdaq stock market talks about the fiscal cliff. and david walker offering his ideas for the country's budget

issues and discussions on the 2012 elections and future of immigration legislation. tuesday, british former minister delivers a statement on the israeli-palestinian conflict live starting at 7:30 a.m. eastern on c-span 2. and f.c.c. chairman talks about international telecommunications policy. also on c span 2. . .

>> history and reality is too complicated to get our heads around the if deal with it in its full complexity. grant said the union and during the civil war. i contend that a grant saved the union during reconstruction. >> from obscurity in galena, illinois, to a court house, and 1600 pennsylvania avenue, the life of ulysses grant, thursday night at 10:15 eastern, part of booktv costs for a holiday weekend.

but president obama met with congressional leaders last week to discuss a plan for avoiding the fiscal cliff. the ceo of the nasdaq stock market talks about the fix the debt campaign where he and other ceos are willing to pay higher taxes as part of the deal to avert the fiscal cliff. he spoke at the brookings institution in washington for about an hour. >> the afternoon. my name is glenn hutchins. i'm the vice chairman of perkins. >> there is no doubt that bob is an extraordinarily successful business executive. under his leadership, the bell

units -- the value of perkins has increased. revenue has gone up. cash flow has gone up from -$800 million per year. he has taken them from the knees market in the united states and made it one of the most important global markets. those are very straightforward facts. he has a track record to be proud of. the market he has built however, is the reason why we have asked him to be here today. the nasdaq stock market has 32 companies around the world. lista great strength is to the world's most important technology companies and almost all important technology companies in modern america started out on the nasdaq. during my business and -- business career, nasdaq has been the venue for a successful growing company to get the capital to continue its growth. this is a point of want to

emphasize. it is small, growing companies that create all the jobs in america. these are companies that start out small and become google, or federal express, or places like the nasdaq. those companies go disproportionately to the nasdaq this is one of the key mechanisms by which jobs are created in america. we have lost track during the debate around sarbanes oxley, more recently in the debate about dodd-frank, but our capital markets are the envy of the world. our equity markets are something that are unique to america, their deep, there are strong, there are one of the key ways in which we keep growing an economy that is competitive in the world. that is why we have asked about

to come here. when you spend time around washington, people want to know what markets think about this and that. today we have the market. this is personified by bob reinfeldt, the ceo of the nasdaq. [applause] >> thank you for the kind introduction. i have to start by saying i first met glen be seven or eight years ago and at that time, i was a capable and focused business execs but did not have a lot of time to spend on views of the wider world. under his tutelage, that has changed and we have had a number of interesting discussions. as i stand here today and talk about certain policies, recognize if you happen to disagree with me, blam eglen what he has taught me. it is my great pleasure to be here at brookings.

i appreciate the opportunity to speak today. i would like to especially thank martin. we all need to take a very hard look at the significance of the fiscal cliff that is facing the united states of america. what is the consequence of our failure to act is a question we would like to answer today and what is the political mobilization necessary to prevent a further damage to our economy? we all here today have an important role to play in solving the fiscal challenges facing the u.s. i look forward to discussing that with martin. i am the president and ceo of the nasdaq group. we operate the nasdaq group here in the united states and 22 markets around the planet and we are proud of what we bring to the table. when you think about me standing here today, it is kind

of interesting for the stockmarkets to be talking about a debt crisis. when we talk about debt, it is not equity. we americans don't traded and don't listed and don't regulated so why am i here talking about that today? i want to talk about the federal debt today and the deficit because, in many ways, it is, in fact, a spreading cancer. i called that because like a patient with a well-diagnosed cancer, we know is there and we know it will spread and we know what it can do. we are now not operating as a person patient. to many americans are choosing to ignore it. we are in some form a state of denial. because it is not yet causing a crisis, too many americans have a false sense of security that everything is okay.

there is no decisive action required today. we feel we can deal with it tomorrow. of course, neither of these two beliefs are true. what is certainly true is the federal government seems quite able to add $1 trillion each year to the national debt. many people believe we can do this in definitely. too many people actually believe this can go on for decades and decades. they think so because one of the fact is, as a country, we can currently bar money -- borrow money at 1.7%. last week it went down under 1.6%. that is a happy state of affairs. we do not deserve to be able to borrow that money so cheaply because, as a country, we have not yet demonstrated the vision or the courage in how we will pay it back. we must decide. we must decide because the process of delaying the day of

reckoning with our $16 trillion debt is hurting our economy today. we don't see it but it is hurting our economy, our businesses, and is hurting the market. the fiscal cliff scenario with a mandate for higher taxes and reduced federal spending is now just two months away. unless congress and the white house intervened, this will happen as "the wall street journal"reported a fried egg, no doubt, most companies would suffer if the u.s. goes over this cliff and economists say this will slow economic growth and will drive us into recession. my good friend terry duffy at the cme said we have seen corporations poured cash, individual doing the same. -- ohorading cash and individuals doing the same.

this is not the average business and people need to realize that. those of us outside of government must continue to make it clear to intend that compromise can no longer be considered a four-letter word. in discussions and debates that prevented the decisions from happening last year, we must move past that. it has certainly been a plus to hear the president and house speaker say repeatedly over the last two weeks that compromise is now with both parties want. words are a start but words are easy and we must have a result for action. -- a resolve action. i don't expect to have a grand bargain achieve by the end of the year. the extension of the bush tax cuts and a deal not to enforce across the board federal

spending cuts on january 1 could be the most we could reasonably hope for. that will leave the markets in some degree of uncertainty. the uncertainty relates to whether or not the grand bargain will be released in the first half of next year. that uncertainty really is a cause for concern for all us in the business community. when we think about our u.s. indebtedness and the ratio of increase in the federal debt, is important to recognize that our ratio of gross debt to gdp is now more than 100%. among the g-20 economies, we now rank third of indebtedness behind japan and italy. five years ago, we were at 62% and ranked ninth. at the current rate of u.s. federal debt rising by $1

trillion per year, the ratio of debt to gdp will be 114% by the next presidential election in 2016. as many scholars have noted, increasingly of late, the downfall of great nations across the centuries always began with their inability to respond when the foundations of their financial houses cracked. the truth is, debt is not an alternative means of funding. debt, in our context, has become a convenient narcotics, as easy and addictive as any drug lulling us into complacency by postponing the hard choices, raising revenues or reducing spending. increasing levels of debt also increases the amount of interest to be paid, further increasing the amount of resources that ultimately we need to be devoted to repaying the debt. i run a company at the center of global markets that interacts with 3200 listed

companies around the world and many market participants. i speak every day to chief executives who run these companies. we all agree that a government that incurs substantial recurring bar wing as a means of funding eventually will act like a company short on cash flow. by this we mean a company to short on cash flow will always postpone investments. they will cut maintenance, r &d, pensions, and benefits and otherwise short change its future. all the while, it will scramble in turn -- for new sources of revenue and new opportunities outside its operation. when the government behaves this way, it not only shortchanges the future, it profoundly impacts the entire economy and all its citizens. the longer we go for a better balance between federal expenditures, the more we will

postpone and the night expenditures necessary to support the future. we are creating a terrible burden on our children and grandchildren tomorrow an exasperated -- and exacerbating the paralysis of the markets today. the historical evidence suggests long run implications for our economy could be severe if our $1 trillion per year continues. highly indebted countries dedicating 90% of gdp on average experience a reduction in gdp growth of one percentage point per year relative to less indebted countries. at the individual level, a slower pace of gdp growth means the per capita gdp could be reduced by as much as 30% by 2013. this trend pleasant to $18,000 less per year for every man,

woman, and child in the u.s. than we would have otherwise earned. that prospect is now less than 20 years away. the major financial crisis brought on by high levels of debt could have a negative impact on the economy than these numbers indicate. in the short term, the primary impact of the debt trajectory viewed as unsustainable is more uncertainty. we live with that today. there is more uncertainty about future taxation and spending policy. there is more uncertainty about government's ability to prepare for future needs by reloading the fiscal canna necessary to deal with the geopolitical or economic issues. there is more uncertainty about central bank intervention in the credit markets and when it will end and the subsequent course of interest rates increasing. there's more uncertainty about

who will hold the debt, who will get caught holding the bag when the low interest rate party ends? at nasdaq, are listed companies cannot innovate or concentrate on investing in new capital, hiring new workers, grow their businesses when they have to worry about the safety of their cash. they hesitate due to uncertainty about future growth. in the case of the sequestered, they even need a plan for layoffs. there are enough challenges and headwinds for managing business operations day to day. chief executives understand that when they surveyed the destructive market consequences created by the federal debt. they shake their heads and think," these are self-inflicted head wounds. why is this still happening?" a survey conducted in september by the senate for quality said that 35% of investors say continuing budget deficits and

federal bar wing have more influence on their confidence than any other issue or event. that was in september. i would venture to say it is higher today. when are listed companies do not grow, investors do not buy stocks an entrepreneur cannot raise capital. when these things do not happen, the u.s. economy does not grow and the american people suffer and so does the dynamic nature of our markets. people might ask," what does that mean with respect to the market? why does that matter?" the stock market is the most transparent price discovery mechanism for capital. it sets the price of equity risk and return and they are exchanged between investors. i for partners and investors also used stock market prices to make their own decisions about raising capital and

investing in new companies. the stock market does not set the risk and return in isolation. it does so in the context of the broader economy or stocks must compete with other assets for investor capital. the government inaction and the central bank intervention in credit markets to keep interest rates low and finance the deficit is creating distortions in the competition for other assets. we all realize at some point that this distortion will end. it is the same kind of deleveraging we have felt for the financial crisis of 2008 but this could be a much grander scale. many types of assets will be re-priced. bond yields will rise and bond prices will fall and the cost of financing current deficits will increase. there won't be much cash

available to move into government investments for the future. new bridges, research and the basic sciences, public schools, better equipped for the 21st century, and so on. it will mean less spending on a rigid on technology and less capital available to existing companies and less capital for entrepreneurs looking to go public on our market. a decline in american ingenuity but would be a consequence in overtime, there would certainly be decline of our position in the world. as all prices adjust to market forces could reach a point where investors refuse to buy u.s. treasury bonds. we see investors' reaction -- reacting to the potential of these realizations now through an aversion to risk. since 2007, over $1 trillion has flowed into bonds and even a greater amount has flowed out of equities. in addition to a lack of clarity about huge tax policy, -- about future tax policy, this act as a deterrent for

investments. $1 trillion is moving into fixed income where it is basically paying zero. that shows a fundamental aversion to risk. for companies able to access the credit market, times have been pretty good. investor appetite for this debt translates into cheap money for many companies. many start up companies do not have access to debt financing. the companies that create jobs in this country rely on equity financing. the debt markets have never been available to them and are not available to them today. the vicious cycle we're in today is the startup companies have limited access to capital and capital is not there because they are growing an

aversion to risk and that was triggered by massive uncertainty by what we are about and what our plans are for addressing -- addressing the fiscal deficits. 1.7% is certainly attractive to many companies who have been able to access debts but the question is -- do we deserve that rate and why is that right here? a debt is cost based on the ability to repay. if our ability as a nation to repay was based solely on our ability to print money, debt would cost more than 1.7%. that is because inflation would be created as a result of the printing of money on the other hand, our ability today to repay should be based on our ability to increase revenue or decrease spending.

with political dysfunction, we're not sure we have that. we appear unwilling or unable to use that tangible ability. we have to recall' in washington last year around the the debt ceiling debate, the reaction to simpson-bowles and the performance of the super committee. the reality is our ability to pay is based primarily on the belief that we will find a buyer for our future debt and we will in turn use those buyers funds to repay our current debt. and bankers terms, we think we can keep rolling it over. others have said that we risk losing the u.s. role as the world's reserve currency if we do not be a responsible way. that is not a current rest but it is a risk within the decade

when you look at the pure math. that ignores the emotional aspect of the financial markets. our ability to find a buyer is based on the credit market assessment of future actions of the fed and the dollar's role as a world currency. to the extent that changes, we will be dealing with a new world. when rates eventually go higher either due to the fed finally tightening credit or the erosion of the dollar, then credit will no longer the cheap. at 1.7%, that will be a dim memory. if this occurs at a time dictated by the markets rather than by washington and's own choosing, there will be a number of a very significant consequences. investors will begin to refuse to buy current government debt and as possible you could see a threatening crisis in the years to come.

the federal government would be hard pressed to reload the fiscal cannon. the cost of the debt service in that environment will be enormous. investors and retirees with social security and state debt will see their portfolios lose value. home buyers will see the cost of mortgages to rise and home owners will likely see the price of their homes fall as few buyers qualify for these mortgages. the government could have its back to the wall at that point and we would be forced to embrace more drastic steps to ensure fiscal balance of the government does not take action now. why hasn't the government taken action? let's be candid -- putting aside the rhetoric -- rhetoric and the possible last two weeks, the behavior in washington in recent years confirms we have lost the ability to compromise. politicians who attempt to move to the center are set upon by

their own side. one size faces continuing pressures never allowing a cent of spending cuts and there's a call countervailing opinion from the others as a reserve -- the other side that does not want a tax increase. each side of states the other side cannot win no matter what the consequences. the vast majority of americans consider this irresponsible and want solutions, policies that seriously confront the national debt we are facing. as i think about this, the situation within the beltway is a variation on the classic prisoner's dilemma game. in that game, each player's optimal action lease to an outcome that is damaging for both. in the case that federal got -- debt and the government, what each party perceives as its optimal action is essentially neutral for them but extremely horrible for the economy and the rest of us.

i am one of more than a corporate ceo's who will sign doubt for the campaign to fix the debts. some of you might have seen the news about our goals and our agenda. we think there is a lot to like in the simpson-bowles recommendation. we all recognize a common thread that -- the inability to be sustainable in the federal budget, the inability to have a sustainable federal budget is hurting our business in a fundamental way. we all agree there must be shared sacrifice. these federal budget must be put on a path to sustain the ability that can clearly withstand any changes and the political winds that might occur. this means additional revenues will need to be raised including from businesses by broadening the tax base while reducing the tax rate.

tom quinlan supports the reduction of the elimination or reduction of certain tax deductions in exchange for a lower corporate tax rate and the repatriation of cash held up by the u.s.. the uncertainty caused by not addressing the fiscal cliff will continue to hurt business. tell us the rules and we can play the game. if the rules are not certain, we cannot start to play the game. with dollars that federal spending will need to be curtailed. i want to be clear -- i am an optimist. i leave the gloom and doom most on to my lawyers and accountants. it has been hard to be completely optimistic about our economic future if the budget problem is not addressed.

globally, we are seeing recession in much of europe. chinese growth is slowing as is grow the other emerging markets. out better to act on the u.s. budget is aggravating existing weakness in the global economy. this is clear, it is time for real leadership in washington, for elected officials to have the courage and vision to do something right for our country. it happened under president reagan and president clinton when major compromises were achieved on debt and deficits. it can and should happen again. if not, our country's economy will grow slowly -- more slowly than it otherwise would have. at nasdaq, i suspect we will continue to face headwinds in our core business. this has negative implications

for our trading and listings business. we may do better than our competition but not as well as we should be doing and not as well as our economy should be doing. the confidence of executives who invest, grow their businesses as well as investors in our markets and that is directly related to the problem of the federal debt and deficits. we also recognize the fiscal cliff and the sequester are not a compromise or even a path to sustainable growth. these policies were created to prompt the government to act in the future. now is the future and we are waiting to see which side will blink and who will win. this could assure are mutually decided destruction. my our elected officials must recognize the principle governing responsibility is paramount to their legitimacy.

governing to win does not, in fact, provide legitimacy. before we begin the q &a, i want to simply state that after this year's long and bitter political season, it is time for air nation to come together. time is running short to decide how we will address our national debt problem before it becomes a crisis. i certainly want to urge all of you to join in. everyone can pitch in now in their own way. we created a website for employees in the u.s. to fix the debt and communicated to their representatives in congress about the urgent need for action.

business leaders, employees, investors, retirees, we all share a huge stake in this economy. i invite chief executives of other countries who have not committed to fix the dead to join me and the attic -- and the 80 other ceo's ready to be involved to drive this movement which was organized one year ago. as we continue to build rapidly strong national voice demanding compromise, that will make it more appealing and politically possible for our representatives to take the necessary action so thank you. [applause]

>> thank you, i am marchant bailey and i will start of the questioning and then we will throw it open to the audience. i want to congratulate you for this effort to fix the dead. the debt. many of us felt the pressure from the business community was important to get this done so i think it is terrific. you mentioned some of the consequence is likely to happen as a result of continually increasing the amount of debt. equity markets may suffer and eventually is and as rates will rise. -- interest rates will rise. we have been hearing that for a while. equimark it's an interest rates have stayed low. can you give us a sense of why that is or what is the time

horizon where we might see some of these impacts? that would put pressure on congress to do something. >> i think we have seen that pressure. when you speak to the fact that $1 trillion has moved into the fixed income market, that shows investors are saying they have real aversion to risk. the demand and the debt market has helped with central bank action to contribute to low rates but that does not speak to our unemployment issue. when you look at what drives the job growth in this country, it is small businesses, they are growing. those small businesses are growing but right now they are not part of the debt market but they are exported from the market because you don't have a supply into that world. one of the few bipartisan

effort to we saw last year was the jobs act. that was in recognition that because of the state of affairs, we were choking the life of the small business growth. that was meant to help it. we are definitely seeing a clear impact today. >> there is a lot of merit to simpson-bowles. there is also the rivlin- domenici plan. many people including myself consider business taxes that the rate is high and may be discouraging people from investing in the u.s.. on the other hand, we need more revenue and need to raise taxes. how do we square that full set?

>> when you look of the business tax rate, i think we are second of the developed countries with respect to what we charge corporations. sweden is a country we run and they believe in government and they are taking their corporate tax rate down from 26% down to 22%. with our non-competitive from that point of view. the extent that we addressed the cash rate of the corporate world, we will certainly see a renewed effort to invest in the u.s.. we obviously have a gross tax rate of that affects the tax rate. the other topics related to that is the repatriation of a fobbs.

the stockholm stock exchange will settle -- celebrate its 150 year anniversary next year. we make a dollar in stockholm. for us to bring the money home it would be taxed again. we're not going to do that. we want to make sure we take that money and invest somewhere outside and it is not a coincidence that the three -- last three acquisitions will done are from companies outside the u.s. who can use will recall our arap cash. you need to have sensible adjustment to that policy. >> there was an event in new york last week, a clearing house event, and there was a lot of wringing of hands of the

reputation around wall street. a lot of banks and other people on wall street feel they have taken a big hit. is this something that should just happen with the passage of time? are those things that you and other leaders can do to try to get people to understand the role of financial markets? >> you will need the passage of time. 2008 happened and the economy is still recovering. the financial industry has to do a better job not talking so much about financial innovations of the products they been -- they bring to individuals and corporate america. yes, we have to do a good job but it will take time and it is now likely to happen soon.

alwaysy can't i encounter is that we never had these things 50 years ago. my thought is that it is a different economy. >> the general heading of risk management products and that the financial center has the ball but of the last 10 years or so have been a great boon for the country. in terms of the less than wall street, we have to go to the national uses of those products like the farmer or the power plant or regional water if you have your own plumbing. as an investor, you like to invest in the core business. the harder message for the journal is for any financial market, the natural are seen as

a good actor in the place. it to natural buyer or seller of interest. the intermediaries in the bill times are subject to vilification the definition and the role of intermediaries and the marketplace is not well understood. it is also a hard message to deliver. >> let me throw it open. i have more questions but let's go to the audience. >> you mentioned simpson-bowles and the need for revenue and one of the ways simpson-bowles proposes revenue is increasing

on taxes on capital gains and dividends. is that something you and other co's can retaliate. >> it has to be shared paying. -- pain. it is going to be difficult any way you slice it. some of the revenue increases have to be painful. c.l.'s are smart not to realize that the extent that they individually are paying more in taxes, does that bring stability to this system. the bar owners of vassal so ago we a second try. i believe people think that when you have revenue increases it can be a rising tide. >> question from the audience?

yup. >> i am from the australian financial review. in the 44.6% of rates for next year if there is no general >> you're ok now. >> did not catch the last part but i know where you are going. >> what you are speaking to is a symptom of the sequestered. to the extend intelligence is not brought to the debate, then you will have certain actions

which don't make a lot of sense. the sequester was never meant to be implemented. it was meant to be so onerous that cooler heads would prevail and compromise would be the rule of the day. if the question was do i think going to a different rate on dividends, i think is bad. we need to call our policy beggars to test to come up with a logical plan the has the proper balance. >> one of the intents of dodd- frank was that moved derivatives on two exchanges. we had exchange desk based - exchnage-based .

guest: >> this was really to move derivatives to clearing houses and not so much exchanges. they certainly are trying to promulgate more transparent trading but the clearing house part of it was mandated. it brings to light the credit dimension of transactional activity. in the equity world cover credit quality is somewhat assumed that you have a short settlement cycle and you also have deep and liquid markets. as you get into derivatives contracts and some of them being laundered, the credit aspect becomes real. and more onerous. you're using removing all the credit from two parties into a clearing house environment, the

credit really dominates the conversation. i think it is a good thing for us to be facing a lanai in a car if crisis head-on. how do you stress credits and areas in tough times? we are mucking through a but is better to be doing in now than light we did two dozen 8. >> i want to thank you for being part of the group that is speaking out. my own question over the last few months as i have been reading more about what the situation looks like, it does

not look particularly optimistic. i am wondering that if you had to make recommendations to somebody in your family or a close friend, would you be asking them to make a change in the way they go about things in the future? [laughter] >> that's a great question. i am fundamentally an optimist. i do believe that cooler heads will prevail and that we will

have not so much in the lame- duck session but sometime in the first half of next year an agreement, a compromise, which will put us on a path to stability. i know it was the treasurer of australia who said he thought america was one fiscal agreement away from returning to some level of preeminence in the economic affairs.

i almost agree with that statement. to the extent to come to an agreement in the first half of next year and that we do something credible in the lame duck session will calm this down a bit but it has to be something substantial that shows congress on the white house can come to a deal. it cannot deal negligible. if a substantial enough, with a good down payment, go to a fiscal cliff agreement at the beginning of the year, i believe the underlying spirit of the american innovation is still there. i have had a greater perdue -- greater opportunity to spend time in these areas. i would be long-term bullish. >> yes. >> based in your experience, could you raid on a scale of 1- 10 how much more you believe you need to do to educate new reporters and organizations and political interests that want to use the economy and stock market as one and the same thing.

how much more do you feel now as they need to do more to educate people new and old on the reality that the economy is not the stock market and they are not interchangeable. there is a difference between political reporting and financial reporting. >> you can start nasdaq u. >> we can kind of do that. we have our educational foundation with institutions of secondary and higher education in terms of educating about the market. i would go back to one of your premises -- the stock market is definitely some derivative or indicator of the economy. it certainly is not bad in the

short term. it is certainly that over the medium term. you have a situation where the debt markets have clearly been super-charged. we know some of the reasons for it and did it dealt it talks back to -- we know some of the reasons for it and it talked to some of these issues. i think the two of them are joined together. , the medium and long term. our education effort is understanding what investing is and there is a fundamental difference between investing and trading. it is a long-term effort and we hope the bears offered overtime. we spend more time in the world markets today than we did 20 years ago.

>> let me ask about the optimism u.s. expressed. if we can get growth going, that will make a huge difference. there are some people like an mit economist who was the co- author of a book saying that a lot of innovation is taking place but is not a job-creating innovation. they have 700 million users on facebook but it is only creating a few jobs. do you see the kind of innovation -- innovation that is a job created? >> that is working hard to get good news and bad news.

>> he struck a bit of a court and got some reviews of. >> when you go out to san jose today and it has been this way all through the credit crisis, there is more jobs -- than people. the last i was there every time i go there, i checked. in the city of san jose, you had 14 jobs that had been unfilled. that will speak to other issues we have with respect to immigration policy. obviously, the ripple effect through the economy from these high tech jobs is quite strong and could be a second order impact. if he is recommending that we don't want these companies to grow --

>> no, no. >> the question is what else do we have to do besides dominate high-technology. i can see that as a valid question. >> yes, over there. >> thanks very much. i would be interested to know, back to the group of chief executive officers, who are of one mind about needing to reduce the deficit and get the best down so that the capital markets perform the way they should. to what extent can you tell us beyond the overarching goal of getting the deficit and the debt down, to what extent with this group of 350 people are so agree on the steps by which they would prefer this to be

accomplished. i am interested in -- one could say of the congress, many things, but one could say that the congress is of a mind that we need to get the deficit down and reduce our debt and fixed ratios. it is when you get down to the details of whether you do it through revenues and expenditure cuts, you can see where the impasse comes. have the ceo's drill down through this enough?

>> let me start at the macro part of that question. the ceo's are pragmatic people. when you hear political debate which is basically by neri, we don't relate to that. you always have to go to middle ground. those of us in business, you never get entirely what you want in any negotiation as though it was middle ground. clearly, in this debate, middle ground has to be some balance between spending cuts and revenue increases. for those on the right to what one way on those left the other, what that ratio is, i don't think the co's par of one

mind on that. it could be 1:1 but there has to be some ratio. the statement of the co's saying there needs to be revenues separates them from some of the hard-line positions taken by others. the willingness of the c.l.'s to say yes, to have an increase in our individual tax rate is acceptable in the context of an overall deal. that is something i think as uniform agreement. beyond that, within particular policy deliberations, you probably will get more fragmentation in terms of viewpoints. the goal of the tour for a rigid corporate tax code is to keep it revenue neutral and broaden the base.

i think that has wide support but not unanimous. i think it is wide support there. that is wise to go to a territorial tax system and i get excited about that because it makes common sense and it pains me to have that money the offshore knowing you will never come back. the deeper down you go, the more fragmented you get. the unanimous aspect of it at the macro level is quite substantial. that's a clear message we can deliver. >> question? >> hello, i am wondering how you would compare the debt situation, the fiscal situation of the u.s. to that of the

bureau's own. -- the eurozone. >> most of our operations in europe with the exception of finland are outside the eurozone/ we're probably not on happy of our positioning their. finland and several baltic countries are adopting the euro a little late in the game. this country has so much more fundamental strength in what you see them in europe. our trend of destruction would be slow motion. with respect to our fiscal capability, we are probably 10- 15 years out from running into the problem you saw in europe.

from a mathematical point of view, understand that as to london to as an aide, emotions can make things happen quicker. we're and a fundamentally different place let's not kid ourselves that europe as a road map for where we are. we are here, we are knowledgeable, we are forewarned, let's get the political will to do something. >> is the fact that europe is a debt crisis, does that make their situation more dangerous? -- does that make our situation more dangerous? >> if you look at what you expect for gdp growth next year, we know we are in an interconnected global world.

to the extent you have a recession in europe and a slowdown in china, that puts more pressure on our economy and will put more pressure on gdp growth. our concern is that we are lulled to sleep by fantastically low interest rates. it is a wonderful thing if you are refinancing your mortgage. it is masking the pain in some fundamental way. >> it is not my line but we are sort of the favorite horse in the glue factory. >> we are a great company so we go in front of the s&p and moody's to get a rating and it is a rigorous process. if the u.s. government had the same process to go through in regard to this credit rating, it would not have a rating that would give it an interest rate

of 1.6% on the 10-year. it is disconnected from reality. >> i think that was a question there and that will probably be the last. >> hello. my name is melissa kirby. i was wondering your thoughts on the fact of necessary bailout of the national debt, specifically in regard to insurance companies not being able to make their payments hot on environmental disasters or otherwise. >> security companies are not able to meet the cost of sandy? >> or in the future with regard to others. specifically more on bailout and the effect of national debt.

>> it is hard to see that we do not need national regulation in the insurance industry. we certainly have it for the future. it does have advantages. we still have state security regulators. we have an oversight by there. this ties back to the financial industry. you have to have proper reserves in the insurance industry. i would say with respect to bailout, they are creating an environment where they do not have to do bailouts. it means there are so many safeguards along the way that were not there. do you separate the investment

bank today? you have the vicar's reports in the u.k. which deals directly to its. you have systemically important organizations. clearly what happened in 2008 is a wake-up call for policy makers to make sure that whatever businesses present a risk, some sort of systemic risk to the economy than that this the fundamental proper role of regulation to make sure that it is in some way firewall so it doesn't have cost contagion. >> thank you so much for coming and talking to us. we appreciate it. [applause] thank you for being such a good teacher. thank you all for coming.

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when she chose neil to be the first to venture to another world and to have the opportunity to look back from space at the beauty of our own. it could have been another, but it wasn't, and it wasn't for a reason. no one, no one, but no one could have accepted the responsibility of his remarkable accomplishment with more dignity and more grace than neil armstrong. he embodied all that is good and all thatñó

>> how does one adequately express his feelings about a special friend?

when that friend is also a world icon, a national hero of unimaginable proportion and a legend whose name will live in . neil, wherever you neil armstro armstrong. fate looked down kindly on us when she chose neil to be the first to venture to another world and to have the opportunity to look back from space at the beauty of our own. it could have been another, but it wasn't, and it wasn't for a reason. no one, no one, but no one could have accepted the responsibility of his remarkable accomplishment

with more dignity and more grace than neil armstrong. he embodied all that is good and all thatñó

it seems most hispanic immigrants throughout the history of the u.s., is a circular flow. want to come here for five or 10 or 15 years and worked and then go back to their home country with the savings. since we are not going to get a massive increase in green cards to make up for a number of hispanic workers coming in , comingcan't a -- why can't a guest worker program that served as a solution? >> i think it can. the report showed 30% of the

people here on undocumented status don't want to stay here permanently. they want to come here, make money, then go home and open a garage in monterey, for the same reason a lot of our retirees are moving to mexico, because the american dollar goes a lot further in mexico right now than a dozen u.s. -- a lot further than it does in the u.s. if they had the cards, they could visit their families and we would have more of these people who would come here to work as a number of years and then go back to their country of origin and want to retain their ties there. 30% of the people here on undocumented status did not come here to stay here permanently and don't want to stay here permanently.

that works for them. i think assimilation, if we had a legal immigration policy that works and gave a pathway to illegal immigration for the undocumented, they would begin to assimilate at the rate that former immigrant groups have assimilated. the undocumenteds have not assimilated at the same rate because they have to stay in the shadows. they're subject to exploitation by unscrupulous people who prey upon them. they're not assimilated as quickly as previous immigrant groups have been assimilated. >> you used the term that's important as we begin this discussion, which is circular migration. that is why we have the problem we have. dr. land addressed the issue of those who want to stay. they stay here because to go back would mean leaving and then re-entering illegally.

so they end up here. let's also look at the guest worker program not only as a function of the needs of our economy. it's also a pro-family approach. you know how many families are broken up in mexico and central america by people who come here to work, either spouse, their children back home, and never see them. they have a commitment to send remittances, but the a nice start family's here in the united states. it is breaking up families. we cannot guarantee for every single person that entries the u.s. a path to citizenship. we have to adopt the concept of circular migration. you will see a lot of people, perhaps a majority, wanting to come here to work and then return to their country. but we have to make it flexible. so when they're done with their job, they can go back to mexico and then reenter for the next season of work.

i think it has to be flexible. it has to reflect the needs of the market. it is precisely the unions to make this argument that the guest worker program is some sort of indentured servitude that the only way we can allow immigrants a path to citizenship. that's ridiculous. we cannot give a path to citizenship to everyone. in terms of not increasing number of green cards, i'm not sure we will get to that discussion. governor romney, a proposal made during the primary which nobody paid attention to, was doing away with quotas for the immediate relatives of permanent residents. that perhaps is an interesting approach to facilitate legal immigration, family. we have to consider increasing number of green cards to facilitate more legal migration and allow people to be here permanently. >> it also comes down to -- the fed's not being effective in running a guest worker

background check, but we also need to look at how the states handle it. we have a driver's license departments all over texas. we have the facilities and means to be able to do this. the states or it's a lot better than this town works. go home for thanksgiving and stay a week. you, pierre and it gets gridlock. it is not just it about getting cheap--labor. you come up here and it gets gridlocked. we need to make sure we have this discussion and start with solutions versus the rhetoric. >> i think we may have just witnessed a first, which is somebody at aei holding up the dmv as a form of efficient government at work.

i guess it really is like a holoca -- like a whole other country. >> at least a grand duchy. >> maybe folks who are skeptical of conference of reform plans are just ignorant and somehow diabolically well funded, buy i think folks who are for these sorts of reforms have to listen to themselves and think if i am saying this will all resulted in a circular to migratory flow and it's all going to work out perfectly and it's not -- and it's going to be perfectly administratively feasible and we will have the political will to enforce limits on the guest worker program when we have not had the political will to do so yet and our lack of saying is one of the major reasons we have for arguing for it, maybe people are just not going to quiet buy ut. -- buy it.

if the impetus for the temporary worker problem is there's a political problem for conservatives and republicans, that cannot possibly be the solution to it, because you will be instantly outflanked. there will be an argument the says you want folks to work hard here and you don't want them to become citizens or voters, you don't want them to have full political rights. that's not going to be winning message. you will always look like you are stingier and warehouse style to hispanics. that argument is correct. that's why it will have that bite. >> we have a question here. >> from george washington university, fred. my question relates not to the cheap labor or to the highly qualified.

to be holding member but rather someone that went to undergraduates here or grant school and is trying to find a place in society it's always attached to your employer. you lose your freedom of movement and lose part of the free-market labor that americans have and have taken for granted. your health care attacked to your citizenship, scarier than that is having your permanent status in the country being attached to your lawyer. how'd you address a person that's not in the lower tier or the top tier, but just a middle- class type of person which is what makes part of the american society? >> as part of the naturally -- permanent residency process, we have two mechanisms come with his family-based immigration visa or employment-based.

even those who come here to work, they could be petitioned as immigrants and eventually become citizens. the question is perhaps we need more immigrant visas for workers. one of the interesting things that happened in the last congress, which was not reported, because republicans are anti-immigrant, was a bill introduced by congressman schiff it -- chafits which passed the bill overwhelmingly. what it did was it did away with quotas for employment-based immigrant visas and for family- based its doubled them.

i think there's room here, because we do need people with advanced degrees. if it is an employment-based job, we need to increase that number so there are more employment-based visas available so more can become permanent residents and eventually citizens. >> if i could also say, i completely agree with your question. i think that the linkage to a particular employer is the problematic part of this policy. if you want an immigration policy that meets u.s. economic need, then maybe what you do is

cut back on the use of immigration to reunite extended families and increase skilled immigration and not have it so tied to a particular employer precisely to serve the cause of the labor markets. >> one of the things the council on foreign relations task force did was we wrestled with this, was to cut back on extended families and people to nuclear families. the number just would gastronomical otherwise and opens it up for the kind of thing you are. talking are the whole system is broken and needs to be fixed. i think we need to understand something. we are a unique country. we are the only country in the world that is a credal country. anybody can become an american. if they are willing to pledge allegiance to the secular creed la augustid out in the declaration of independence.

if i lost my mind, i probably could go through all the legal provisions and become a citizen of france. thank god, that still would not make me a frenchman. anybody can go through the legal provisions and, an american. the great thing about our country, i lived in england three years and i enjoyed it. but it's a really boring place compared to america. the reason is everyone of our immigrant groups that have come to this country, even the ones that were brought here forcibly, jazz, our cuisine, our language, everything has been enriched by every immigrant group. they have contributed to our culture.

we are not saying you should suppress that. we have columbus day parade for italian-americans. we have polish american rates. we have cinco de mayo and texas. even have anglo-american events. daughters of the revolution, a commemoration, though not much of the celebration. the emphasis has to be on the right still. -- the right syllable. you are hispanic-american, italian-american. i spoke to someone from germany who chose to become an american. i asked why. he said you have so much more freedom here. in germany there are tremendous expectations about what you are supposed to do and how you are supposed to behave, based on your family background. here you are free. we want people who yearn from that freedom to come to the united states. they always have. we want them to continue to do

so. it is what makes us americans. >> we have a question here. if you could ask your question and then hand over the microphone. >> i am a canadian working in the u.s. on an stage one visa, a process i would not wish on my worst enemy -- an h1 visa. how would you address the reforms for those who want to come to the u.s. to work? and i agree with his point on the emphasis being on work and to boost the economy and pay taxes in the american tradition. would we have to only get a job if there was not one for american -- if there was one for american? and on boosting wages for all levels. thank you very much. >> go ahead and ask your question and then we will take both.

>> i am a first-generation immigrant and a new york republican, which basically means i have to be democrats everywhere else. i want to be intent where the republican party is going and everything. how can the republican party become a big party again, how it was under ronald reagan? i feel the republican party is slowly becoming a smaller and smaller party and throwing people out like me or other republicans saying you're not a real republican or things like that. and the democratic party is going the opposite direction. they were the small party in the 1980's and late 1970's. now they are the inclusive party bringing in latinos -- and blacks beforehand, and all these other groups.

how can the republican party switch and start to be more inclusive? >> why don't we take the first question first? anybody want to address that? >> the visa, the process is broken. i would like to give an example. the entire agriculture community, growing fruits and vegetables to anything agricultural, thousands and thousands of pieces are applied for. less than 2% of their entire work force is approved for visa. there's a 50% foreign work force in major-league baseball and 100% of their visas are improved. who does more for the economy?

that shows how broken our system is there are so many jobs available. i was watching a program last night with the skilled workforce, how skilled labor is an issue. having immigrants come to our country is what our country is about and how it was founded. this is a discussion we need to have and look for. currently i have talked to many people, especially in georgia, how cumbersome is. so we need to streamline that and make it more efficient. i think the states can help a lot with that and cut the red tape. correct the second question, it seems to me that the republican party is the party that's far more tolerant of dissension than the democratic party. i remember bob casey not being allowed to speak at the democratic convention because he was pro-life.

we have pro-life and pro-choice republicans. name me a pro-life democrat other than bob casey senior. we have a pro-life -- we of pro- traditional marriage republicans and we have homosexual and lesbian republicans. name me pro-traditional marriage democrat national figure. the democratic party has been ever since the new deal a collection of interest groups and ethnicities. the republican party has been the big tent party. i think it still is the big tent party. where it has lost its place is it has nominated people like governor romney, who is a really nice guy and who i think would've been a pretty good president, but he speaks conservatism as a second language.

i severely am conservative. nobody who is really conservative has ever said i am severely conservative. it is an oxymoron. we need -- there's nothing wrong with the republican party that better candidates and better messaging would not solve. i think marco rubio would be no wonderful hispanic version of ronald reagan. >> let me quickly, on the h1 visa, the problem with the frustration sometimes is not necessarily -- an order can be a problem with the processing, but it is with the caps. right now is 66 or 65. do we need more than 65,000

people with advanced degrees? absolutely. so that's the problem. i don't know if it's necessarily the processing. let me defend immigration service's for a minute, because i've served six years there. the processing of adjustment of status to green cards to permanent resident green cards, naturalization decisions are actually being processed by now fairly quickly. you can naturalize in this country in less than six months. a lot of the problems right now are the number of visas available are not enough. let me quickly addressed the issue of the party. part of immigration discussion and what the anti-immigrant folks of wanted to do was to

scare republicans by saying that latinos would never be republican. i heard some comments made and i disagree with him, because it is a generalization that i hear many times about latinos. they say that -- it shows a lack of understanding -- about the latino community. they are opening businesses three times as fast as the national average. latinos are people of faith. the majority of latinos believe in the right to life, by 66% compared to about 40% of the rest of the population. on marriage, latinos were decisive to pass proposition 8 in california, 53% of latinos voted for proposition 8 in california. we are extremely conservative. we also have to understand there's a big difference between the old latino community of 20 or 30 years ago, the cesar chavez era, those in new york and those in the southwest

since the u.s. to over parts of mexico, and then the new latino population that is 40% foreign- born, and the rest are children of immigrants, very conservative. when asked about the government they may give answers that are not extraordinary. sometimes we get tangled. we have seen this in this election cycle. on specific issues, if we had a better understanding on where they are coming from and a better understanding of why they're answering the questions that way. with the latino community i believe we lost the latino vote because of immigration. if we would've had a better position on immigration from the get go, from the primary, governor romney would been competitive and he would've been competitive in battleground

states where the latino vote was decisive. finally, we have to stop being rockefeller republicans. we are not the party of the 47%. when governor romney said what he did last week, that obama won because of gifts to latinos and other minorities, that is insulting. latinos did not vote for obama because of obamacare. i think he is engaging obama in the same type of class warfare discussion that obama wants to have. i think we have to go back to the conservative populism of ronald reagan, which is to talk about the economy but say something else. romney -- >> very quickly. >> we cannot run only on an

economic message. >> exactly. >> react before conservatives on social issues, on national issues, and on the economy. >> and aspirational americanism, where you are free to go as far as you want to go and to do what you want to do. you are right about hispanic community, especially, they are very entrepreneurial. when they start small businesses, they start like the big government less. >> we're out of time. i want to thank you all for coming today. please join me in thanking our panelists for this terrific discussion. thank you. [applause] [captions copyright national cable satellite corp. 2012] [captioning performed by national captioning institute] >> coming up on c-span, navy secretary ray nabus and jill biden announced the name of a

new navy submarine. dan grover norquist, president of americans for tax reform, on the election, taxes and the u.s. economy. live at 7:00 a.m., washington journal looks at federal spending on hurricane sandy, military ethics. >> there are many people who might even take issue with grant saving the union. didn't lincoln do that? he did. i will not say grant was the only person who saved the union but he was the commanding general of the army that put lincoln's policies into effect. he was the general who except that the surrender of the armory -- army of northern virginia. if anybody won the war on the battlefield, one of the things we do in history is we

generalize. be simplified. because history reality is simply too complicated to get our heads are round if we deal with it in its full complexity. grant said the union during the civil war. i do contend that grant saved the union during reconstruction as well. >> from obscurity and going to illinois to a courthouse in 1600 pennsylvania avenue, on the life of ulysses grant. thursday night at 10:50 eastern. part of book tv's 4 day holiday weekend starting this thursday on c-span2. >> navy secretary ray nabus was joined yesterday by jill biden at the pentagon announcement for a new navy submarine to be named the uss in delaware. this is a 10 minute portion of the event. >> good afternoon, ladies and

gentlemen. thank you for coming to the navy's ship naming announcement. there will be no questions and answers following the statements. along with secretary of the navy, ray nabus, we are honored to be joined by second lady doctor jill biden and her special guest, her husband vice president biden and attended governor -- and lieutenant governor. thank you for being here today. i will turn it over to ray nabus, our secretary of navy. >> thank you all for being here. i particularly want to thanjk dr. biden for being here and the lieutenant governor of delaware. dr. biden, i understand you have brought your spouse with you. i am pleased to announce today in one of our most advanced navy platforms a fast attack nuclear

submarine ssn 791 will be named uss delaware. the name has been prominent and honored throughout our great naval history but it is named -- a name that has been out of our fleet for too long and i am happy to change that today. seven ships have been named for the first state, stretching back to a navy's earliest days of wooden ships. the last uss delaware was navy's first dread knot, a coal burning, steam powered battleship. that delaware decommissioned in 1923. delaware will be part of the virginia class, built to excel in traditional areas of submarine warfare such as against other submarines, surface targets, at targets on

land. delaware will have some non- traditional capabilities as well. gathering intelligence and delivering navy seals undetected to their missions. during her service which will begin in 2018, delaware may patrol the waters from the north atlantic to the western pacific to under the arctic ice. construction of the uss delaware will begin next year and will be shared by two shipyards, huntington in virginia and general dynamics' electric boat in connecticut. the submarines are great success story. they had been owned or ahead of schedule and under budget. this summer, we commissioned another one of these great boats, u.s.s. mississippi, well named.

that submarine set a record for the programs fastest delivery, a year ahead of schedule. in 2008 the year before this administration began, our fleet stood to lend it 78 ships. 38 ships you were than on 9/11. but we have turned that around. just three ships were built in 2008. we have in the last two years, in spite of a more challenging the school environment, put 42 ships under contract. most of them multi-year deals trade we have increased competition and oversight and we are on track to reach 300 ships before the end of the decade. the navy is unique in constructing these incredibly complex and technologically

advanced platforms that are designed to last for 30, 40, even 50 years. there will be sailors who will serve on delaware who are not yet born. today's sale of operating these amazing platforms are incredibly talented, highly skilled, and eagerly accepted the responsibility of the demand from even the most junior crewmember. most americans do not realize what sailors to or even know anyone in the navy because less than 1% of our population wears america's cloth. when the navy is doing their job, all we are most often a long way away from home. we are truly america's away team. that is why we name some of our ships for states and other places in america to remind our home for those who served. there is always a strong

connection between the people of the state and the ship that bears its name. for that and for many other reasons, i am very proud to announce also today that dr. jill biden has agreed to serve as sponsor of the u.s. as delaware. dr. biden, our nation's second lady, a proud blues are mom and a renowned and accomplished educated. for military connections -- her military connections run deep and strong. biden'sus know boe service in the army. a couple weeks ago, her son hunter will receive a commission in the united states navy as a public affairs officer. the support of the military goes far beyond that of the service of her sons . she is co-sponsored with our

first lady, michelle obama, on a national initiative joining forces to provide support and expanding opportunities for veterans and active duty personnel and their families. that exemplifies the commitment to those who served and those who have served and the strength of character of jill biden and however home, the first state. i know delaware citizens will honor their states namesake come off all her eshoo comes to life in a few years and embraced those -- follow her as she comes to life in the next year's and embrace those who sail the seas of our nation and upholding her state's motto, freedom and liberty, and the navy motto. forever courageous. it is my haply privilege --

happy privilege to introduce the sponsor of the u.s. at delaware, dr. jill biden -- of the ss delaware, dr. jill biden during >> thank you. this is a very exciting day. as a proud military mom and a very proud delaware citizen, i am honored to sponsor the uss delaware. one of the best parts of serving as second lady is that i have the opportunity to meet with some many members of our military and their families. i am always inspired by their strength and resilience. the matter what challenges they face, our men and women in uniform served with courage and distinction. they are the reason we have the best and most powerful military in the world.

it is our duty to make sure they have everything they need to stay safe and do their job. they need the very best equipment and technology we can provide them with ensign that will include the uss delaware. it is a special honor for me to sponsor this submarine because i'm such a proud military mom. four years ago, i stood in dover, delaware, watching as our sun prepared to deploy to iraq with the delaware army national guard. i remember it like it was yesterday. this year, i am looking forward to standing with our son hunter when he is commissioned in the united states navy. he falls in the footsteps of two of his grandfathers who also served in the navy. the navy was a memorable part of my life as a young girl. my father what always take my mother and his five daughters to

watch the blue angles. his picture was proudly displayed by the front door of our home and through his stories of police, he grain in all of us -- and beliefs, he ingrained a sense pof pride. captain thomas macdonough whose famous victory helped end the war of 1812, to newcastle, serving as the home of some of the first female air force pilots, to the thousands of delaware citizens who have deployed to iraq and afghanistan, our state has so much to be proud of. today, delaware's 77,000 veterans carry on the rich

tradition of service. this great tradition of having a civilian spontaneity vessel helped to cement the critical connection between our service members and civilians back home who love them, ms. them and know them a debt of gratitude. in the years to come, i am looking forward to meeting the sailors who serve on the vote, i am excited to get to know their families because wherever the delaware goes, a little piece of my heart will go with her. thank you, secretary nabus for this honor. and may god bless our servicemen and women. thank you. >> on washington journal, andrew grossman of the wall street journal on federal spending for hurricane sandy relief. then, an author on military ethics. after that, founder and executive editor of the hugstrom

report on the future of the farm bill. the last farm bill expired in september. trust your e-mails, malkoff, tweets. -- emails, phone calls, and tweets. the president -- grover norquist, founder and president of americans for tax reform. his remarks came at an event hosted by the center for national interest. it is an hour and 20 minutes. >> we are delighted to have grover norquist with us. he is president of americans for

tax reform but in the spirit of full disclosure, he has also a member of our board of directors and in imparting colleague pretties poker several months ago -- and a very important colleague. grover spoke at the center several months ago and talked about taxes, u.s. economic policy. that was about taxes and the electoral campaign. now we had elections and the taxes are at the center of a very important political debate and at the center of negotiations between the obama administration and congress,

particularly the republican controlled house. as i watched the president during his recent press conference and listened to leaders of the house, i think everybody agrees it would be desirable to reach a compromise. the elections provided a mandate. the president seems to kick that he is the one -- seems to think that he is the one who got the mandate and that republicans are saying yes, mr. president. and how you reconcile two mandates and reach an agreement? what are the consequences of failing to do so? this is one of the most important issues facing the administration, the congress and

the nation. mr. grover norquist. >> several months ago i said there are two options. after the election, it bond is like it -- if romney was elected, he would have republican senate to go along with the house. it would pass the ryan plan and have a territorial tax system rather than a worldwide tax system. on the spending side, do that and have a reform, the means tested programs would be block granted. and the medicare would be premium support. this would drop from obama's spending plans about $6 children over the next decade. put you on track towards a balanced budget. that is still the republican plan for when they have the house and senate but they did not get the white house or the senate in this election. that option mustafa -- moves off

until you have a different president and senate. now we have a divided government. republican house, obama reelected, and a democrat majority in the senate enough republican votes to have -- to filibuster. we got the status quo. obama sometimes talks as if the status quo he got was the 2008 one. he won by several points against a war hero and got 256 democrats led by nancy pelosi in the senate and 60 democrats in the senate -- super majorities in both houses. i and otheres saw the likelihood the republicans will lose another three or four senate

seats. there were no democrats we comeht were -- might not back then you had 2010. the republicans took the house with the rating -- with the reagan republican majority. which is not much more than gingrich had. and strengthened in the senate, and not to filibuster on anything he wanted to. and a weakened president because people voted against him based on his agenda today. what the democrats and republicans each hoped out of 2012 was, republicans thought they would finish this off and we did a straight line from 2008 to 2010 and now in 2012 we win the presidency and the senate. democrats thought the republican house was just a fluke. this was just a tea party thing,

they will be swept out with the tide. almost all kickback -- cameback so we have these competing narratives. obama wins with a shrunken market. anybody else who won a second term that a larger merger -- margin of victory. even bush increased his. clinton increased his by six points. obama went from 7 down to three. 8 million fewer votes total. a little tough to seek a strong mandate there compared to say .eagan's second term you also have the challenge that all presidents are lame ducks as and as they get reelected. if you look at the present at the beginning of his term, he might be there for eight years. if you need something from the white house, you have eight years of having to deal with that person. we now have for years and ticking on a reelected

president. the republican house menominee the bush -- ran on maintaining the bush lower tax rates. we have a mandate to. the democrats, when they got their majorities in the house, they got two landslides republicans only got one landslide. the republicans got their landslide in 2010, the year when everyone did redistricting for the next decade. democrats won the house for four years. as you move forward, would you look at what but passed out, the mandate -- they reelected the house. red states have republican

governor and both houses legislator republican. 24 of them. 14 states have a democratic governor, a democratic legislature. these of the people who redistricted themselves. republican losses tended to be a california and illinois where democrats redistricted against republican incumbent. so people you thought my is what with the tide -- might be swept out with the tide were not. republicans like to have a 10 year run because of detecting -- because of redistricting. republicans have touched the

third real. you have better republicans back now, all of whom had to answer 100 questions about the ryan plan and block granting and medicare and survived. the new guys have to face the same question in. i would argue you have a republican party that not only touched the third round rail and did not end up where all the smart people knewyou would end up if you discussed and talk of reform. and now 10 years of the republican house committed to these reforms. all the things people flail about. republicans have passed the budget on the subject in the house. budget does that do any

of the things you what it did it -- a budget to do over the next decade. those of the two competing mandates. obama, at first you get this i won re-elctioection, i'm king, d then as events happen, it becomes clear he denied it to do what ever you want. and they have enough votes to filibuster in the senate. and he will lead -- will need many increases in the debt ceiling. the last time as for an increase, republicans announced the toll for that would be the bigger role which is to put $5 in trillion. this begs the cost curve down going into the future. so that is where we are on

tenerife first, if nothing is done -- so that is where we are. on january 1, if nothing is done -- that is $500 billion in one year, $5 trillion over a decade. all small businesses will face 44% ofay's 35% but about taxes. that is a 20% increase in tax rate that higher income people, people that make more than $250,000 will pay but also half of all small business income. corporations like general motors

that pay corporate rates, we will see the tax on small businesses jump as the president wishes, more than the 35 - 39.6, but up another 2, 3, 8 points on top of that. the fiscal cliff elapsing tax cuts. the second piece is the sequestration. $100 billion a year being sequestered from the increases in the budget. these are not cuts the way you or i think of cuts. these are budget increasing not as rapidly as the various agencies will buy them to. the $2 billion of that is out of national defense and $30 billion of that at the domestic discretionary -- $50 billion of

that is out of national defense and $50 billion of that is domestic discretionary. will the republicans keep obama on a short leash and give him an allowance every month in return for better behavior or will they give him a debt ceiling that goes along time? what will happen? one option is looked to history. two years ago we faced exactly this situation, the 2001 2003 tax cuts all lapsed. we had a republican house coming in, and democratic senate and democratic president.

why would that not the way you do? obama says i will hold my breath until i term blue instead my feet -- i turn blue and stampd my feet. 2 years ago he said he did not want to raise taxes on small businesses because it would damage the economy. now he thinks this economy is stronger than it was two years ago and we are in better shape to take the economic hit. it is an interesting question. if you go over the tax cliff and taxes are raised dramatically, the house would have our past -- will already have passed.

on the sequester, i thought if republicans won the house and senate of the president say, since it -- sequestration would not happen. it denied give up any of the savings from the sequestered . but did so by impacted the pentagon less heavily than the sequestered it. but divided government, i think you get the question. president said he does not want to change the money for the pentagon. mitch mcconnell said we are not raising taxes to ransom the pentagon budget cuts. a lot of focus has been on the pentagon but these are more concerned about the $50 billion in domestic discretionary spending restraint every year. you did to the republican study committee. the announced all a thing worse

than sequestration would not be having savings. this stampede attempted did not take. he denied a demand that the defense budget be remain untouched, either of the public opinion or the house. i think sequestration happens. the only thing i could imagine is if they -- the r's and d's would rather take it out of entitlements rather than the annual budget. could they cut a deal where they say it is the same amount of money but out of entitlements? that is the only compromise i could see. then you get to the ground -- grand bargain idea. it seems every time i have his conversations were people ask about the grand bargain, what is the non-negotiable for obama?

he also wants to spend an additional 5 $7 billion on another stimulus package. he is not willing to discuss entitlements. the republicans would like a ton of a reform and not have the rates change. the president went cave on significance spending reform, something he has been president for four years and recommended non of. for two years he had the house and senate supermajorities. if he had done at that, he would have undercut the republican party is a critique of his presidency. the fantasy the democrats really want to reform entitlements, except they have never done that when i have power. democrats really want to raise taxes of the they did the

opposite of that when they have the power to do it. they each sacrificed the things most important to them to get to each other. they were married, they were friends predict try to be nice to each other. -- friends. they were trying to be nice to each other. i do not think we have the set of structures here. strikes me as an odd prediction. so we go closer and closer. the two things i have been recommending -- all the negotiations be on c-span. the we do not have any more obamacare close rooms except

for the insurance companies. that should be written and argued and discussed with c-span cameras. we promised not to be starkey -- snarky. we will take it now as a step of the right direction. i think will be very interesting to see you as willing to say yes and he does not want to. we learned a lot about how the president graves around -- behaves behind closed doors,. . the second point, whatever is agreed to, it is to be put in writing and online for seven days.

so every american will and can know what is on it and look at it and have other people take a look at it. there is a new verb in washington to be -- called to be tarped. the republicans about it were sold to a bill of goods by the bush white house -- by the white house. to be tarped is to be rushed out in front of the questions. this seven day waiting period was something obama ran on. the idea that this should be

written down on line to anybody can read those. tax change is not perhaps what they are advertised to be. republicans have lived through the '82 deal. spending went up, not down predict tax increases were real and stopping them. in 1990, the offered bush $2 -- $1 for every $2 a tax increase. we cheated reagan. we cheated reagan.